Bankia (Spanish pronunciation: [ˈbaŋkja]) is a Spanish banking conglomerate that was formed in December 2010, consolidating the operations of seven regional savings banks.[3] As of 2012, Bankia is the fourth largest bank of Spain with 12 million customers[4][5]

Bankia reports a total business volume of €486 billion with total assets of €328 billion. Formerly a private bank, it was partially nationalized by the government of Spain in May 2012 due to the near collapse of the institution.[6][7]

On 25 May 2012, Bankia requested a bailout of €19 billion, the largest bank bailout in the nation's history.[6][7] The new management, led by José Ignacio Goirigolzarri reported losses before taxes of 4.3 billion euros (2.98 billions euros taking into account a fiscal credit) compared to a profit of 328 million euros reported when Rodrigo Rato was at the head of Bankia until 9 May 2012.[8] A report in March 2013 put 2012 net losses at 19.06 billion euros, the largest corporate loss in Spanish history.[9]

Contents

Bankia was formed on 3 December 2010 as a result of the union of seven Spanish financial institutions, with major presence in their areas of influence. The merger of the seven savings banks, known as 'cold fusion', took only four months, with the integration contract being signed on 30 July 2010. Caja Madrid, which is itself owned by the government of the Community of Madrid, holds controlling interest. The distribution of shares was as follows:

After the merger, Bankia was initially owned by a holding company Banco Financiero y de Ahorros (BFA), and the seven banks controlled BFA. The most toxic assets from the banks were transferred to BFA, which obtained 4.5 billion euros from the Spanish government rescue fund FROB in exchange for preference shares with an annual interest rate of 7.75%, maturing in 2015. In 2011 Bankia offered shares to the public in an IPO.[10][11] Investment bankers found little interest in the IPO among international institutional investors. Strategy shifted to selling the stock domestically with 98% of the initial 3.1 billion euros raised by domestic sales of shares.[12]

Shares of Bankia began trading on the Bolsa de Madrid on 20 July 2011, under the symbol BKIA, and was listed in the IBEX 35.

In 2012, Bankia was the third largest lender in Spain, but the largest holder of real estate assets at 38 billion euros.[11] On 7 May 2012, Rodrigo Rato stepped down as chairman of Bankia SA in order to clear the way for a rescue plan that the Spanish government hoped would persuade international investors of the country's financial stability. José Ignacio Goirigolzarri became the new president. Concerns about the value of Bankia's assets, and the potential for further losses in the future prompted speculation that the Spanish government would inject up to 10 billion EUR of new capital into the troubled bank.[13]

On 10 May, the Spanish government said it would convert its preference shares in BFA into voting shares, giving it a controlling stake of 45% in Bankia.[11] On 25 May, trading in the shares was suspended at Bankia's request.[14]

On 25 May, it was reported that Bankia SA had negotiated a further 19 billion euro (US$23.8 billion) bailout, marking another rise in the cost of a drawn-out rescue.[15] The government had already spent 4.5 billion euros to prop up Bankia, and the entire rescue was then seen totalling some 20 billion euros.[16]The New York Times described the increasing bailout as making Spain one of the new focal points of the European sovereign-debt crisis.[17] Bankia also revised its earnings statement for 2011, stating that instead of a profit of 309 million euros, it had in fact lost 4.3 billion euros before taxes and asked for 1.4 billion fiscal credit to reduce its loss.[8][14]

In response to growing concerns, Standard & Poor downgraded its rating of Bankia's creditworthiness to "double-B-plus", making it a junk bond.[15]

The new bank has its registered office and address of the subsidiaries in Valencia, while its operational headquarters are in Madrid. It is also present in the following countries: Germany, Austria, China, France, Ireland, Italy, Poland, Portugal, the UK and the US.